Scotts Miracle-Gro plunges after guidance cut

The lawn and garden company said sales are suffering as demand slows down. Executives are not giving new guidance.

By Kim Peterson Jun 12, 2012 6:17PM
Image: Senior man with lawn mower © Jacobs Stock Photography/Photodisc/Getty ImagesThe gardening season reaches a peak in May -- and that's traditionally the time to shine for Scotts Miracle-Gro (SMG).

But this has been a rough spring for the company. Sales of its products in U.S. stores are only up 3% this year, down from 8% growth back in May. The downturn was enough to force executives to cut their full-year guidance of 6% to 8% sales growth and earnings estimate of $2.65 to $2.85 a share.

The company warned investors Tuesday afternoon of the coming guidance cut. It won't give new numbers until its third-quarter earnings update in August.

Investors dropped the stock in after-hours trading, sending shares down more than 15% from Tuesday's $43.05 close.

Demand is simply slowing down, Scotts said in a statement, after a strong start in the second quarter. The gardening season "has not met expectations," the company said. The slump may be partly due to poor sales in the sale of flower and vegetable plants. The turmoil in Europe will also hurt the company's business there, executives added.

Scotts CEO Jim Hagedorn posted a lengthy video message about the situation on the company's website. The company will use the next six weeks to perform a detailed analysis about the gardening season, he said. "Category growth is becoming harder to achieve," he added.

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Tags: SMG
68Comments
Jun 12, 2012 9:09PM
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 Maybe since my house lost 40% of its value, I DON'T GIVE A *&^% ABOUT THE LAWN...
Jun 12, 2012 9:12PM
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Executives cut their guidance. Bet they won't they cut their salary.
Jun 13, 2012 1:47AM
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I think in these trying times I would have to classify lawn food as a luxury item.
Jun 13, 2012 7:43AM
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Why does everything have to increase in sales all of the time?  Why is it so bad if it only maintains the status quo?  I would certainly like to achieve that with my income!
Jun 12, 2012 9:19PM
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People are losing their homes right and left, not to mention the people who just can't 
afford to buy a home right now and are renting...what's to figure out???
Jun 13, 2012 7:12AM
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The consumer is buying less overall, but mainly they are buying only discount or generic brands... Scotts stuff costs double or triple the store brands, etc... so in tough times, these premium products can be dropped like a hot potato.  Perhaps they have parallel cheaper brands under a different label, but maybe not.  That would be a typical way to manage consumer switching behavior. 
Jun 12, 2012 11:13PM
Jun 13, 2012 10:16AM
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I walk around my neighborhood every morning 2 1/2 miles on a walking trail and sidewalk.  I live in a gated community PUD w/ 3 pools, 6 parks, 100 ac. lake for fishing and boating, 15 Tennis Courts, and a Golf Course.  I have been walking this area for almost 4 years that I have lived in my home.  A blind man could see that 1 out of every 5 houses are vacant (20%) and the yards need major beautifications.  There are not cut, edged, shubbery maintained and certainly not fertilized.  I am surprised Scotts products or any gardening products company are holding the line that close.  The economy is the reason business is off so bad.  Scotts has great products and I use them 3 to 4 times a year. 

 

Election day is coming up in November be sure to vote because your personal net value decreased 14% in the last 3 1/2 years and the national debt grew by Trillions of dollars and gasoline has more that doubled.  What will the economy be like in 3 1/2 more years unless something changes?  Vote!!!!!!!          

Jun 13, 2012 12:56AM
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if my latest purchase of scott product (scott lawn patch) is any indication of quality controll,

i am not suprised that you have a downturn in sales.

after applying the product according to directions and watering every day for a week,

not one blade of grass appeared.

Jun 13, 2012 11:51AM
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Scotts products are great . My lawn and flowers look better than ever.  I dont know what the big deal is.  A 3% increase in sales is a lot better than a 1% decrease. So the company expected a 8% increase big deal I expected a 5% raise and I have gotten nothing. I'm still here and doing well. But I would be doing better if I had a raise.
Jun 13, 2012 11:09AM
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True grits is the correct assessment..I too live in a community with vacant homes, and I cut way back probably spending only a fifth on lawncare from last year. Its a combination of vacant homes (for sure lost custmers with none soon to return) and out of work 40-50 yr old home owners no longer buying product for lawncare. Plus anyone with a home is either fearful of  losing job and proably paying down expenses rather than beautify the home.  That is why Scotts is down bc just the sheer drop off of  customers. Its nothing Scotts or the industry did, that customer base is just no longer there for the forseeable future. They need to restructure as a 21st century business with new numbers. One possible suggestion, lower prices may helpd some of us buy more.
Jun 12, 2012 11:29PM
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Local municipalities are competing with them now with their own brand of soil. I like both of their products, but the cheap or  free stuff seems to work as well.
Jun 13, 2012 11:54AM
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This can all be explained by simple math: why should I buy Scotts Lawn Care products to keep my lawn and gardens in pristine condition when the value of my house is falling regardless?

Jun 13, 2012 12:33PM
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I think this has more to do with the housing downturn than the economy. People aren't investing much into their homes because their homes aren't producing any kind of positive return. Growth in property values is normal and healthy. It will come back again.
Jun 13, 2012 10:15AM
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I found that their Turf Builder does work better than any other lawn fertilizer and I always buy it every year, don't know about any other products
Jun 13, 2012 2:57PM
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the reason thier product is not selling is because of the giant price increase over the last few years the average guy cant justify spending $60 for a single bag of weed n feed..hate to do it but generics may not be as good but priced much better
Jun 13, 2012 11:40AM
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Life under Obama even the lawns cant eat. 
Jun 13, 2012 12:46PM
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Today I picked some of the tastiest radishes, crisp baby cucumbers and topped it off with some sugar snap peas.  All tossed in with fresh leaf lettuce.  The garden is thriving this year.  

The secret: going to a local dairy and them allowing me to load up on the dried cow plies they have all over their pasture.   If you mix it into your garden soil while its dry, the smell you might think would be a drawback is non-existent.  And one always washes of fresh food from the garden anyway  therfore, Miracle Gro or Mooo-acle Gro, does not matter which I use.

Jun 13, 2012 11:05AM
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I don't know about other Scotts products, but I know that I don't buy their Miracle Grow flower and garden fertilizer anymore because they changed the formula to be too heavy on nitrogen......good for lots of foliage, but NOT good for flower or veggie production.
Jun 13, 2012 3:05PM
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Obama haters we get the point.
You want Romney to win.
You can stop now, its just annoying.


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